Featured Guest: Professor Laura Coordes, JD

What she does:  Professor Coordes is a Professor of Law at Arizona State University's Sandra Day O'Connor College of Law in Phoenix, Arizona.  Her research focuses on bankruptcy and financial distress and includes commercial law, large corporate reorganizations, international and comparative insolvency law, and local government finance and policy. She teaches Chapter 11 Bankruptcy, Advanced Bankruptcy, Secured Transactions, and Contracts.  Professor Coordes is on the board of the American Bankruptcy Law Journal, a member of the American Bankruptcy Institute, and has presented her work and perspectives nationally, including The Wall Street Journal, Yahoo! Finance, and Bloomberg Law 

On risk:  "It's important to be looking at the bigger picture, the industry pressures, the interconnectedness of the whole industry, and some of the big challenges that the industry as a whole is facing to try to figure out, okay, how can we really create some stability in health care … Indicators or factors can really impact and pressure the market, and in turn, can then impact and pressure individual health care businesses … Distress or closure of a health care business can cause ripple effects. So even if, on a narrow level, a particular health care business is doing fine, that could change fairly quickly, depending on what's going on in the nearby area or in the industry as a whole. And so I think if you're running a health care business, you have to be concerned, of course, about your own business and its financial health, but also about what's going on and with the other health care businesses in your area … What's challenging for an individual health care business, there's so much that you have to take into account that is outside of just the four walls of your own business."

Transcript

Scott Nelson  0:01  
Welcome to The Risky Health Care Business Podcast, where we help you prepare for the future by sharing stories, insights, and skills from expert voices in and around the United States health care world with a mission to inform, educate, and help health care organizations and individuals, ranging from one doctor practices to large integrated systems and organizations throughout the dental, medical, and veterinary health care industry with risk, while hopefully having some fun along the way. I'm your host, Scott Nelson, a guy that grew up in Ohio and has been working all over the United States during my 20 plus year and counting career in the health care industry, with a commitment to accelerating health care performance through creativity, not just productivity. Let's dive in. 

One way to prepare for risk is to learn from the examples and lessons of others.  Not just individuals and personal experiences, but also through an examination of a real-world example that can be used to gain insights into a situation.  Financial distress, insolvency, bankruptcy, and closure - the ultimate result of a negative risk experience - are potentially and typically outcomes of situations that involve time and multiple factors.  Entities can close as a result of numerous reasons.  In this episode we have a fascinating and crucial conversation with a top health care bankruptcy expert where we'll be exploring 3 real-world case examples to understand the situations, challenges, impacts, and ultimately the result each health care organization faced by asking and answering:  What happened to the entity in this case example? What was the cause and what was the result?  Does it have to happen?  What can be done to not go through the experience of the example entity? 

This conversation is divided into 2 parts.  The first part is a review of 3 case examples with an overview, explanation of what happened and why, and lessons learned and takeaways.  The second part expands the case example conversation to the application of lessons learned for the health care industry.  Discuss applications and impacts, look at the unique perspectives each case offers. Then current and future directions in the industry, exploring trends and insights that are shaping the landscape of health care, including risk.

The goal of this conversation is to look at the examples and work backwards by starting with the results of the three example entities, understand the why and how of each experience, and then discuss what can be done to provide an understanding that will give individuals and organizations a type of risk playbook.
In this episode Laura Coordes joins me to review real health care bankruptcy case examples and discuss lessons learned and takeaways to keep in mind and proactively utilize as preparations for risk in health care. Professor Coordes is a Professor of Law at Arizona State University's Sandra Day O'Connor College of Law in Phoenix, Arizona. Her research focuses on bankruptcy and financial distress and includes commercial law, large corporate reorganizations, international and comparative insolvency law, and local government finance and policy. She teaches Chapter 11 Bankruptcy, Advanced Bankruptcy, Secured Transactions, and Contracts. Professor Coordes is on the board of the American Bankruptcy Law Journal, a member of the American Bankruptcy Institute, and has presented her work and perspectives nationally, including The Wall Street Journal, Yahoo! Finance, and Bloomberg Law. Before joining Arizona State, Professor Coordes practiced in the Business, Finance and Restructuring Department at Weil, Gotshal & Manges.

Let's talk with Professor Coordes about health care bankruptcy and risk.

Professor Coordes, welcome to the show. 

Professor Laura Coordes  3:22  
Thank you so much for having me, Scott. 

Scott Nelson  3:24  
Before we begin talking about financial distress and bankruptcy and health care and the case examples you brought, let's start by learning how you got into your work and studying health care bankruptcies. 

Professor Laura Coordes  3:32  
I got into health care bankruptcy because I am somebody who likes a challenge and who loves to learn, and health care bankruptcies can be really complicated, because I think, as we'll talk about, the health care industry has a lot of different components. And so for me it's, as an academic, it's an area where I feel like there's always something for me to learn. There's always some new feature or facet of the industry that I have yet to explore, and so it's, it's, in a way, it's been very fulfilling to be able to research and write about this, because there's always a lot going on, and it's just been a really fascinating area to explore. 

Scott Nelson  3:32  
Your fascination, work, and experience in this area of health care make you the perfect person to talk with for this episode, review examples and experiences that happened to real people and real organizations in the real world, and take an academic approach to study those examples and experiences and how they actually played out so we can be proactive and learn from the lessons of others.  Let's begin with the first case example you have which is Team Health.

Professor Laura Coordes  4:40  
Team Health is an example that I thought of, of a company that has experienced financial difficulty but hasn't yet filed for bankruptcy and may not ever have to. So we'll see how it goes. Team Health is a physician outsourcing company, and at one point, and I think they still may be the largest ER doctor staffing firm in the US. So they were pretty, pretty they are a pretty big company. They're owned by Blackstone, which is a private equity firm. And I know we're going to talk about the role of private equity in health care. So just flagging that now, private equity owned. And they've been in the news, they were, I think, in the news around 2020 because they were actually the subject of a ProPublica investigation about various practices they had, including things like surprise medical billing and cutting doctors pay during the pandemic. But they came to my attention specifically because they've been experiencing some financial difficulties, and those really came to a head, I suppose, last summer and into the beginning of this year. So in January of this year, Team Health was facing a maturity date for its, a bunch of its debt. So a bunch of its debt was supposed to come due this January, about a billion dollars. But Team Health knew months in advance that it was not going to make this payment. Its earnings were lagging, it just didn't have the money. So it spent last summer negotiating with its creditors, and ended up, those negotiations ended up successful. It was able to get a new financing commitment from a consortium of lenders, and that really gave it two things, I suppose. It gave it the cash that it needed to meet some of those near-term commitments, and it was able to extend the maturity date on some of its debt so it didn't have to make that $1 billion payment all at once. It could make some of that payment and then kick it out a little bit further. And Team Health was able to get this financing in part by basically bumping its existing creditors down the line. It pledged a first lien on some of its assets to that new lending consortium, who then, in turn, were able to make that deal with Team Health. 

Scott Nelson  6:51  
When you say "may not have to enter bankcuptcy"…what does that mean?  In this example Team Health, at least for the time, has not had to go through that process.  What factors into a situation of having to enter or not enter bankruptcy?

Professor Laura Coordes  7:02  
It can be different for every company, to some extent, but I think a lot of it, and in team Team Health is a good example of this is how willing your creditors, your existing creditors, are or to sort of play ball with you, to negotiate, to work something out, and or how willing and able new lenders might be to come in and give you some assistance. And so if you have a lot of lenders breathing down your neck, and you can't negotiate with them, and no one else is willing to really step in and help you out, it may be the case that you say, you know what a bankruptcy filing is the way to go, because, and we can, we'll talk about this, I think, when we talk about the bankruptcy cases themselves, but one of the big benefits that bankruptcy has is this ability to it halts all collection efforts against a debtor, and it gives that debtor, that company, breathing space, time to sort out what's going on, time to negotiate with their with their creditors, and time to hopefully work out some kind of deal so that the company can exit bankruptcy. But I think oftentimes the real difference is in terms of a company that's going to go into bankruptcy and a company that's not a lot of it has to do with they might both have a lot of creditors knocking at their door. But if one company is able to actually either work things out with creditors or get new financing outside of bankruptcy, that can be the lifeline that they need to avoid bankruptcy in the first place. 

Scott Nelson  8:34  
These situations involve a variety of smart, experienced, and creative people working and trying to come up with solutions that are hopefully positive for all parties involved.  What is a lesson learned or takeaway from this Team Health example?

Professor Laura Coordes  8:46  
One of the benefits, or what I maybe, I should say, one of the sort of like takeaways from the Team Health example of distress, but no bankruptcy is almost like the importance of planning ahead and thinking about how to deal with this debt, maybe being a little bit creative, offering some creative financing options to lenders, whether existing lenders or new lenders. And I think that really helped Team Health. Obviously, it knew that it had a billion dollars due in January, and so it was able to kind of take some initiative beforehand, see who could get on board to help it out, and have time to sort of think through well, what can I offer these lenders? What can I offer them? How can I show them that? How can I make them feel secure in terms of their loans to me? And I think that's one thing that Team Health has done, at least so far, is it was able to strike this deal. It was able to be creative. It was able to offer this lending consortium enough and so at least so far it's managed to avoid bankruptcy. 

Scott Nelson  9:54  
Let's move to the 2nd case example, which has been in the news and has some familiarity, Envision Healthcare.

Professor Laura Coordes  9:59  
Envision Healthcare is an example of a company that has filed for bankruptcy, but Envision Healthcare has also emerged from bankruptcy, so it's at least in the short term, a bankruptcy success story. So like Team Health, Envision is a physician staffing firm, and it's also owned by private equity. It was purchased by a private equity firm called KKR in 2018 and last May it filed for bankruptcy. And we talked briefly about what might push a company into bankruptcy versus letting it try to work things out and not go into bankruptcy. In Envision's case, I think there were just a lot of different factors, a lot of different causes, kind of piling up. It had debt obligations. So like Team Health, it had commitments that it had to pay, but its patient volumes were low, it had been in a huge fight with an insurer, which I'll talk about in a minute. The Federal No Surprises Act came out, and it had some difficulty with that, that rollout, and with respect to the insurer, Envision and UnitedHealthcare had actually been fighting for a number of years. Envision lost its in-network status with UnitedHealthcare in 2021 and so all of which is to say, I wouldn't say there was one thing that pushed Envision into bankruptcy, but rather a lot of different factors that kind of piled up and just made it so that it seemed like bankruptcy was a good way to go. And in fact, bankruptcy ended up being a pretty good way to go for Envision. It came out of bankruptcy in the fall of 2023 so basically, about six months after it had filed, that's not a terribly long time, and it used bankruptcy to reduce its debt by over 70% and to make some operational changes. So it split from its ambulatory surgery unit, and that ambulatory surgery unit is now operated separately under new ownership. And so I think, with Envision, I'm a bankruptcy academic, so I always like to plug bankruptcy as a viable solution sometimes, I think we can learn from Envision that bankruptcy isn't just a place where companies go to die. Envision was actually able to use bankruptcy, not just to improve its balance sheet, but also to look at its own operations and figure out where it needed to make some changes. 

Scott Nelson  12:30  
I've heard that as well - using bankruptcy as a tool in a strategic and positive way.  It strikes me that in the past there was a stigma about bankruptcy - maybe that stigma still exists today - but more and more I hear from and talk with more attorneys and organizations in the distressed health care space that consider bankruptcy as a strategy and a tool.

Professor Laura Coordes  12:48  
Yeah, I think that's right. I think sometimes bankruptcy gets a really bad rep, and maybe sometimes it's deservedly so. We do hear about a lot of failures, but I also think it's important to highlight the upside. Sometimes it's necessary, sometimes it's just what a company needs. Sometimes a company really needs that breathing space, time and space to really assess what's working here, what's not working here, and to really sit down with creditors and have some frank discussions about this is what I can do, this is what I can't do, and this is where I see things going in the long term. And bankruptcy can be a space to do that. 

Scott Nelson  13:21  
The third and final case example is one that has received a lot of attention, not only in the news and press reporting, from the beginning through the entire process and still today - Hahnemann University Hospital.  I started reading - and people would send me - articles about Hahnemann years ago when the news first began reporting on the situation and the hospital and situation went through numerous changes and transactions until the ultimate outcome.

Professor Laura Coordes  13:43  
Hahnemann University Hospital is the opposite example, in some ways, from Envision, right. Hahnemann filed for bankruptcy, but ended up closing down, so didn't reemerge. And I think Hahnemann really it's a really interesting hospital. It was an urban hospital that served the city of Philadelphia, and it was an old hospital. It was founded in the 1840s and actually was the teaching hospital for the medical school at Drexel University. And I think Hahnemann was, in a lot of ways, sort of a pretty special hospital, both in terms of the population that it served and the programs that it had. So it its ER served over 50,000 people a year, many of whom were low income. It also operated the city's only sexual assault nurse examiner program. And so it had resources and served a population that maybe couldn't get that kind of health care, or maybe as good quality health care other places. But the big problem with Hahnemann was, I would say it's patient balance. So if you talk to people in the health care industry and in hospitals in particular, at least from my conversations, I hear a lot about patient balance, this idea that hospitals or a practice needs patients with private insurance to offset the patients that they serve that are uninsured or that have government insurance, that really aren't paying the full amount of their care. And Hahnemann just couldn't get there, I think, starting from 2004 onwards. So for decades, it had posted operational losses, and a big chunk of that was just the fact that it had so many Medicare and Medicaid patients and so few patients with private insurance. And so in 2019 Hahnemann filed for bankruptcy and ended up shutting down in the bankruptcy process, and I will say that Hahnemann did not go down without a fight. There were, as you alluded to, there were a lot of news articles about this, even in the popular press, so to speak, not the industry press. There were protests from doctors and nurses and patients out of concern about where the people who rely on Hahnemann would go for treatment, and there were also state and local regulators that were very concerned about Hahnemann closing down. At the end of the day what it really came down to was Hahnemann's parent company was able to convince the bankruptcy court that, essentially, keeping the hospital open just wasn't viable. The hospital was losing money. It had been losing money. It looked like it was going to keep losing money, and there just wasn't a viable way forward. But there's no question that the shutdown of that hospital had an impact, not just on Philadelphia residents who were left scrambling to find alternate sources of care, but also on the remaining hospitals in Philadelphia. Anytime one hospital shuts down in an area, it puts a strain on the remaining hospitals who have to kind of fill in for that hospital. And some of those hospitals in the Philadelphia area are also struggling financially. And so I think that it's a situation where, obviously there was a bankruptcy filing and things didn't maybe go as maybe everybody wanted it to. But I also think it shows that health care financial distress doesn't happen in a vacuum. There's a lot of ripple effects that can extend well beyond just what one company is experiencing, and that's why I think regulators and the government and the public really got so involved in this case, and why it was covered so much, because it really ended up being sort of a case about public interest. 

Scott Nelson  17:34  
Let's take these examples, and the similarities and differences, and consider the broader health care industry.  One similarity in the examples is private equity owned or backed.  Are there similarities or differences between a private equity owned or backed organization and a non-private equity organization?  There is a lot of information and talk about private equity in health care, and that one negative of private equity in health care is that it leads to financial distress and bankruptcy.  Some things you talked about - operational issues, operational changes, management for example - can happen, have happened, and continue to happen at health care organizations such as hospitals similar to Hahnemann but not owned or backed by private equity.  From your work and experience, are there differences between the two that create these situations?

Professor Laura Coordes  18:15  
I think it's hard, right, because, in part, because there's so many different you know, each, each sort of, each health care business has its own sort of unique tale. But I do think that, to paint it with a really broad brush, there's this thought, at least, that health care businesses that are owned by private equity, the focus is not on the patients, right, the focus is profit, and the focus is getting money out of these businesses. And so the concern is that if private equity gets involved in a business, a health care business, the focus will shift from providing good patient care to making a profit, making money, to the exclusion of maybe everything else. I think that's a very broad way to paint it, and I don't, I think there's a lot of nuance in there. For one, I think having good patient care and having an interest in making money are are not necessarily mutually exclusive interests. And so I think it's hard to say, well, private equity just comes in and makes everything terrible. And I think also, as you pointed out, and as we've discussed, there are certainly problems with health care businesses that aren't owned by private equity. And so I think part of the issue is, while it's important to focus on the role of private equity in health care, and I think there's been federal legislation, there's been state legislation introduced to try to mitigate private equity's influence in the health care industry, I also think there's an awful lot of other factors that matter too, and that can that's that's illustrated by the fact that the health care businesses that are struggling are not simply those owned by private equity. There are some health care businesses that are struggling and may not have had a scintilla of interest from a private equity firm. And so I think it's important to be looking into private equity and its influence and its its role in this industry. But I also think that's not the whole story. In fact, I know it's not the whole story. And so I think it's important as well to be looking at the bigger picture, the industry pressures, the interconnectedness of the whole industry, and some of the big challenges that the industry as a whole is facing, to try to figure out, okay, how can we really create some stability in health care. 

Scott Nelson  20:44  
Using the case examples, what can we take and apply going forward?  From your study, what causes a health care entity to become insolvent or bankrupt or close?  Can items be grouped for planning and preparation?  Are there similarities or indicators or markers in these situations that can be identified in advance as an alert?  

Professor Laura Coordes  21:01  
I think there's a number of different ways to group the sort of causes and indicators, and so some of them might be things like natural disasters, floods and fires, and so forth, but the pandemic is obviously a really big one, and that's hard, because I don't know that anyone sort of anticipated the impact of the pandemic and the many, many ways that it would impact not just the health care industry, of course, but the world. So there's obviously, sort of always the risk that some kind of natural type disaster will come along. There's also things like management, mismanagement, some of it benign in the sense of not actively trying to milk the company, or not actively trying to defraud the company or that sort of thing. And some of it may be a little more insidious, but some of it's just short sightedness or mismanagement. I think that in particular with health care, there is just a huge regulatory landscape to be aware of, and that regulatory landscape changes so much and so that can be really hard, like keeping tabs, for example, on all the laws and regulations that are relevant to a health care business probably could be a full time job in and of itself, but that is something to be aware of, because any time a law is passed, or a regulation moves forward, you have to think about, how is this going to impact my business? How is this going to impact other businesses that I compete with, or that I work with? And so there's sort of the legal and regulatory arena and then there's just the market as well. Patient volumes, obviously, what kind of patients are we getting and how are they paying for their care? I think I touched on that a little bit with Hahnemann but also things like labor supply. What does the labor market look like for physicians or health care providers? And covid also shown a huge light on supply chain difficulties. Can we get the equipment that we need and can we get it at a reasonable cost to do the things we want to do? And so all of those things, all of those indicators or factors, can really impact and pressure the market, and in turn, can then impact and pressure individual health care businesses.

Scott Nelson  23:22  
Health care is very unique and nuanced, especially compared to other industries.  Bankruptcies in health care have been increasing.  2023 had the most in recent history and 2024 projected to be more.  Health care is a different business model.  Thinking about other industries and why those businesses experience financial distress, insolvency, bankruptcy, and closure, does size or type matter? If we're talking about a 1-2 doctor practice in a small community or a large multi-facility system in an urban setting, is Dr. Smith or Dr. Jones in one location or the generic community hospital or system that has bigger or multiple locations in multiple cities and states at risk for an outcome like Hahnemann?

Professor Laura Coordes  24:01  
I think the short answer is yes just because there is so much that can impact the bottom line of a health care business. And so I think we've seen that health care distress has affected, and I assume will continue to affect, businesses regardless of size, simply because there are so many different causes of distress, and so to my mind, that doesn't insulate the big guys or the little the little players, and I think it's due in part to the variety of causes, and in part to the interconnectedness of the industry. We've talked about how the distress of one business can really impact others, regardless of your size, we've seen some of the biggest health care companies go down in recent years. And by go down, I mean struggle or file for bankruptcy. And certainly we've seen it at a smaller level as well. We've seen a lot of, for example, small business filings that are health care related. And so I really think that size almost in a sense, of course size matters on an individual level, but sort of from a generic perspective, just because there are all these different causes and consequences of distress, I really don't know that I could say any particular size of business is better off than the other. 

Scott Nelson  25:22  
Continuing with the comparison between health care and other industries, specifically the financial industry and thinking about the Hahnemann example.  There were a lot of comments and protests from state officials and others about patient interests with Hahnemann.  Considering the financial industry and looking back to the great financial crisis of the late 2000s and the idea of "too big to fail,” could health care experience a similar situation and instead of "too big to fail" have entities deemed "too important to fail"?  There has been writing about this idea of health care being "too important to fail" and the ripple effects within and around an area when a health care organization stops a service or closes a facility.  Could someone look at some of these situations - often in rural communities that are shutting down services or closing facilities - and step in and deem these too important to fail? 

Professor Laura Coordes  26:08  
I personally would actually really love to see this. I've seen that argument made in papers and academic writings and that sort of thing. As you mentioned, there's been writing on this, this idea of, yeah, some hospitals or some health care industry players are just too big or too important to fail, and so I would like, kind of love to see this, this proposal, take take shape. I think, particularly hospitals, rural hospitals, hospitals serving the urban poor, like Hahnemann, there's always a concern that if they close down where are people going to go? Are people going to be in a medical desert? And again, that's not necessarily just a theoretical concern. So I don't think the law is there yet in terms of saying, like we have for banks, where we have too big to fail and we have living wills and that sort of thing, I don't think we're there yet legally in terms of a "too big to fail" or "too important to fail" designation for health care businesses, but I think it's something that really ought to be given serious consideration, given the importance of health care and given the interconnectedness of the industry. I did want to say in bankruptcy we do have something called a patient care ombudsperson, which is basically somebody whose job it is is to ensure minimal disruption to patient care from a bankruptcy, and so there is supposed to be somebody there to make sure that patients aren't going to be stuck in that quote, unquote medical desert if a business has to close in bankruptcy. But I think, just like I said that the law is not really quite there yet in terms of too important to fail, we just don't really have a lot of standards to govern what's too important to fail, what's going to put somebody in a really bad situation, medically, I think there's lots of ideas, but the law just hasn't caught up yet to kind of say, these are the standards, these are the criteria for business that's too important to fail, and this is what they should do if you're designated "too important to fail," this is how you should do it. So this is a proposal that I'm very interested in academically. I haven't seen in practice, but I would welcome the chance to discuss it. 

Scott Nelson  28:12  
Thinking about impact, what are some narrow and broad impacts these examples can inform us about what's happening in the short- and long-term within the broader health care industry? 

Professor Laura Coordes  28:21  
There's a lot of different things that we can talk about in terms of in terms of impact and real world impact. I think there's a couple of different illustrations that I glean from looking at these cases and other cases. One is of course, as we've talked about, the interrelatedness and interdependence of the health care industry, the fact that distress or closure of a health care business can cause ripple effects. So even if, on a narrow level, a particular health care business is doing fine, that could change fairly quickly, depending on what's going on in the nearby area or in the industry as a whole. And so I think if you're running a health care business, you have to be concerned, of course, about your own business and its financial health, but also about what's going on and with the other health care businesses in your area. I think another thing that's that's interesting about health care, and sort of a complicating factor, in some ways, is I feel like health care is fairly unique in the sense that the people that get the services, the patients, are often not those who, at least are fully responsible for paying for those services. And so unlike when I go to the grocery store and I buy bananas right where it's just the clerk and me, it's not just a two party relationship between the patient and the health care providers. And so because of that, you have insurance involved as a big player. And changes in the insurance industry then are also important to think about, regardless of whether you're a big business, a small business, wherever you fit into that pie. Then there's this human component. Health care provides very fundamental services to the public. It literally saves lives. And so again, you see the failure of a health care business can often have a more significant impact than, for example, the failure of a retail business. It's just sort of a different level of services provided, and because of that human component, you then have the regulators and the government involved. And so the advice that I've always heard from attorneys who are out in the field, bankruptcy attorneys that do health care bankruptcies, is if you think you're going into bankruptcy, get your regulator involved early and often, or your regulators, you know, figure out who those people are and let them know and try to work things out, because they're going to be an important player in any business's financial distress, any health care business's financial distress or bankruptcy. And so I think what's challenging is for an individual health care business, there's so much that you have to take into account that is outside of just the four walls, hypothetically speaking, of your own business. Of course, health care is also a business, and so the bottom line matters, but you have to balance that bottom line with those other concerns. And I think sometimes that means, as we've seen, I'm thinking of Envision specifically, health care restructuring often involves sort of significant operational upheaval and possibly a shift in the way that an organization views itself and its goals. So when I said I'm thinking of Envision, I'm thinking about Envision siphoning off its ambulatory surgery unit to say, well, we can't focus on both ambulatory surgery and physician staffing. We've really got to just focus on the physician staffing, the ER staffing, or so forth. And so I think for individual organizations, it's really important to understand that what a health care business is able to achieve over time might have to change, and it might have to change because there's something wrong with the management of that organization, but it might also have to do with external pressures the organization is facing, and so I think that's important to keep in mind. And then, certainly on the broader level, this idea that if there are closures in the health care industry, there's going to be a reshuffling or a reallocation of resources on the larger scale, and that's also why I think health care, I mean from an academic perspective, it's fascinating to study because it's in a perpetual state of change and adaptation. 

Scott Nelson  32:31  
Looking at current and future trends and directions from industry insights, I mentioned that 2023 had the highest number of health care bankruptcies in recent history, and back at the beginning of 2024 the year was projected to have more.  Recently, the three big credit rating agencies - Fitch, Moody's, and S&P - released new information, and more than 30 hospitals and health systems had been downgraded by at least one of those credit rating agencies.  There are economic headwinds today but those agencies noted the year could end with fewer downgrades than 2023.  In 2023 there were more than 60 hospitals and health systems downgraded by August 31st so it's possible 2024 is better.  What are some of the current or emerging future trends you're observing or seeing in your study and work?

Professor Laura Coordes  33:13  
On the sort of current side, I feel like we're perpetually still seeing issues of supply and demand, again, both from, like the patient side of things, and from the labor side of things, there's been a growing reliance on Medicare, and so thinking about the impacts of that, of course, as we've discussed already, private equity taking an interest in the industry, and then increased scrutiny of private equity. And then I think always, perpetually, there are hospitals, especially rural hospitals, that have faced financial problems and that risk closure. So on the sort of distress side, there's a lot of those issues that are that are continuing, and I think that's why we're still seeing health care businesses being downgraded. There's still a lot of stress and pressure on the industry, and some of those things, I just I don't know that. I don't know if they'll go away. Like supply and demand seems like it will always be an issue. I think since the pandemic especially, there has been and there probably will continue to be increasing attention paid to burnout in the workforce. But on the other hand, and maybe on the slightly brighter side of things, I think on some level, the continued involvement and interest of regulators is, in general, sort of a good thing. I know it can be, it can be annoying and it can be, it can be fraught with problems, but again, it just, it shows that there is a continuing interest in having these businesses survive and in figuring out how to survive. I think there's also in terms of looking to the future, technology. Technology is becoming, it's changing so fast, I mean, I'm not a technology expert, so I can't even begin to, like competently describe what's going on, but I know that technology is going to continue to shape the industry, and if health care can sort of harness the benefits of technology, without falling prey to some of the burdens, that can really be a game changer in a lot of ways. And so I think looking to the future, figuring out how to use technology, and how to to use emerging technologies, and to do so sort of in a thoughtful way, I think will really be be very important. And I think you just have to kind of embrace the idea that health care is more complex than your ordinary business, and so it can be difficult to try to see the bigger picture and to take all these moving pieces into account. But I also think what makes health care resilient at the end of the day is honestly something like flexibility, being open, being flexible about what you can achieve, being flexible about what you can do, being flexible about embracing new tools and new innovations. And so I think being cognizant of that and being willing to be flexible is, at the end of the day, something that's maybe a reason for hope. 

Scott Nelson  35:59  
That's a great point to conclude our conversation.  Professor Coordes, thank you very much for sharing your case examples and the experiences of your work, as well as your thoughts and reactions.  I really appreciate it.

Professor Laura Coordes  36:08  
Thank you so much for having me. It's been a pleasure.

Scott Nelson  36:13  
Thank you for listening to The Risky Health Care Business Podcast. You can listen to all episodes from the resource center page of the SpringParker website, springparker.com, or click the Listen link in the show notes to listen and subscribe for free on your platform of choice. And remember, accelerating health care performance is achieved through creativity, not just productivity.